Ochoa v. Hernandez Y Morales/Opinion of the Court

This was a suit in equity to establish the right of the complainants (appellees) to a parcel of land containing 106 acres, situate in the Barrio Nuevo, in the Jurisdiction of Naranjito, in the Island of Porto Rico, found to exceed in value the sum of $5,000. The district court decreed that the complainants were the legal owners of this land by inheritance, and entitled to the possession of it as against the appellants, a firm doing business under the name of J. Ochoa y Hermano; that the firm should deliver possession to the appellees; that all entries in the registry of property, of dominio and posesorio title by or in favor of that firm, and all other entries of either kind of title as against the appellees, should be canceled, etc. 5 Porto Rico Fed. Rep. 463. Defendants appealed to this court.

At the time the appeal was taken, § 35 of the act of April 12, 1900, known as the Foraker act (31 Stat. at L. 77, 85, chap. 191), was in force,-since superseded by § 244 of the Judicial Code of March 3, 1911 (36 Stat. at L. 1087, 1157, chap. 231, U.S.C.omp. Stat. Supp. 1911, pp. 128, 229),-and subjected appeals from the district court of the United States for Porto Rico to the regulations applicable to appeals from the supreme courts of the territories. These were controlled by act of April 7, 1874, chap. 80, § 2 (18 Stat. at L. 27, 28), by which it was provided that, instead of the evidence at large, a statement of the facts in the nature of a special verdict, with the rulings of the court on the admission or rejection of evidence when excepted to, should be made and certified by the court below, and transmitted to this court with the transcript of the proceedings and judgment or decree. Our jurisdiction therefore is confined to determining whether the facts found by the district court support its judgment; for no errors are assigned upon questions of evidence. Rosaly v. Graham y Frazer, 227 U.S. 584, 590, 57 L. ed. --, 33 Sup. Ct. Rep. 333, and cases cited.

Jose Maria Hernandez, the paternal grandfather of complainants, was at the time of his death, in the year 1872, the owner and in possession of a tract of land in which was included the parcel of 106 acres in controversy. His title to this parcel was never recorded. Upon his death his son, Juan Hernandez, became by inheritance the owner of it, and entered into and remained in possession as owner until his death, which occurred in the year 1887; but his title was never recorded. Upon his death, Juan Hernandez left surviving him two young children, the complainants, and also a widow, their mother; she died in the year 1906, and the complainants, then still minors, became sole owners of the tract by inheritance from their father; but their title has never been recorded.

In the year 1890, the title to the land in question did not appear of record in favor of any person, either in the books of the present or modern registry, or in the books of the old registry, the ancient anotadurias, or contadurias. In that year Raimundo Morales, the maternal grandfather of the complainants, fraudulently representing himself to be the owner, appeared before the municipal court of Naranjito, an insular court, and by certain ex parte proceedings obtained from that court a decree declaring him to be entitled to the possession of the land, but without prejudice to third parties who might show a better right to such possession. The possessory title so obtained was duly recorded or inscribed in the proper registry of property, in the same year, and was the only title to the land that then appeared recorded or inscribed in the registry.

In the year 1899, Morales again appeared before the same insular court, and petitioned for a decree converting the possessory title, or entry of possession in the registry, into a record of ownership (titulo de dominio). His petition and the proceedings had thereon in the insular court were based upon the provisions of a judicial order, dated April 4, 1899, and promulgated in the Official Gazette of Porto Rico under date April 7, 1899. This order was made under authority of Major General Guy V. Henry, U.S. Volunteers, at that time military governor of Porto Rico, and by its terms reduced from twenty years to six years the period during which real estate must be held in order to permit the conversion in the registry of a posesorio title to a dominio title. Upon the application of Morales, such proceedings were had in the insular court as were provided for in the judicial order, and the court in due time made and entered its decree to the effect that the entry of possession, or possessory title, which appeared in the registry recorded in favor of Morales, be converted into a record of ownership, or dominio title. Thereafter, and in the same year (1899), this decree was duly recorded or inscribed by Morales in the proper registry of title, and the dominio title thereafter appeared in the registry recorded solely in his name.

In the year 1901, there appearing in the registry no claim or right or title in the land on the part of any other person or persons. Morales, still fraudulently representing himself to be the true owner, mortgaged the land for value to the defendants, constituting the firm of J. Ochoa y Hermano, who truly and in good faith believed him (Morales) to be the owner of it, and were entirely ignorant of the rights of the complainants therein. The mortgage was duly recorded in the proper registry of property in the same year.

Thereafter, and in the year 1903, the record still showing nothing respecting the ownership of the lands besides the dominio title of Morales and the mortgage of the defendants, and they being still ignorant of the rights of the complainants, Morales by deed duly executed before a notary public, in which his wife joined, sold and transferred the land to defendants in full payment of the amounts due and secured by the mortgage. The defendants duly recorded the deed in the same year, and by their agent immediately took possession of the land.

The present action was commenced in 1908, shortly after the complainants arrived at full age.

Upon these facts the district court concluded as matter of law that the judicial order of General Henry, dated April 4, 1899, so far as it operated retrospectively upon the rights of the complainants, who were minors at the time and for some time thereafter, and who owned the land during the entire period of nine years that elapsed between the fraudulent entry of possessory title in the name of their maternal grandfather, Morales, and the promulgation of General Henry's order,-was null and void because in contravention of the 'due process of law' clause of the 5th Amendment to the Constitution of the United States.

For an understanding of the questions presented, it should be premised that Congress declared war to exist between this country and Spain by an act of April 25, 1898 (30 Stat. at L. 364, chap. 189); that Porto Rico, then a colony of Spain, was occupied by the military forces of the United States from and after July 25th; that a protocol was signed in Washington, August 12th (30 Stat. at L. 1742), under which hostilities between the two countries were suspended pending negotiation of a treaty for the establishment of peace, by the terms of which protocol (inter alia) Spain agreed to cede the Island of Porto Rico to the United States and to immediately evacuate it, and commissioners were appointed to meet at Paris and proceed to the negotiation and conclusion of the treaty; that accordingly a treaty was signed at Paris under date December 10, 1898, ratifications being exchanged at Washington, April 11, 1899 (30 Stat. at L. 1754), and by its terms Porto Rico was ceded to the United States, and (article 9, p. 1759) 'the civil rights and political status of the native inhabitants of the territories hereby ceded to the United States shall be determined by the Congress.' The military occupation of Porto Rico was immediately followed by the establishment of a provisional government, as will be mentioned below, and this government continued in control of the affairs of the Island continuously until the ratification of the treaty, and thereafter until the enactment of the Foraker Act of April 12, 1900, entitled 'An Act Temporarily to Provide Revenues and a Civil Government for Porto Rico, and for Other Purposes' (31 Stat. at L. 77, chap. 191).

The statement of facts is silent upon the question of the possession of the property from the death of the father of the appellees, in the year 1887, until the appellants entered into possession under the deed given to them by Morales, in the year 1903. Assuming (in favor of appellants) that Morales had possession from the time he procured the entry of a possessory title in his name, the effect of this, as between him and the true owners, was that uninterrupted possession for thirty years would ripen into a good title and confer immunity from action (former Civil Code [P. R.] arts. 1959, 1963, New Civil Code [P. R.] §§ 1860, 1864). He was not entitled to avail himself of article 1957, that declared a prescription by possession for ten years as to persons present, and for twenty years with regard to those absent, because this was confined to possession 'with good faith and proper title,' and Morales had neither, within the meaning of those terms as employed in th Code (former Civil Code [P. R.] arts. 1940, 1941, 1950, 1952-1954; present Civil Code, §§ 1841, 1842, 1851, 1853-1855). The entry of a possessory title in his name was in effect a judicial certificate declaring him to be entitled to the possession, but without prejudice to third parties who might show a better right to it. It gave him no title as against them, but conferred a prima facie legitimacy upon his possession, being 'provisional and presumptive evidence of ownership;' and it fixed a date from which his possession should be treated as originating; and so the entry amounted (for present purposes) to no more than public notice that from that time his possession was adverse to the true owners. Soto v. Registrar of Property, 15, P. R. R. 597, 600; Morales v. Landrau, 15 P. R. R. 761, 772; Pares v. J. Reynes & Co. 2 Porto Rico Fed. Rep. 402, 428.

But appellants rest their case upon the provisions of the mortgage law as amended by the judicial order of General Henry. The mortgage law is a somewhat elaborate system of registration for instruments of conveyance, that, having been long in force in the Peninsula, was extended to Porto Rico and the Philippines in or about the year 1893. It was designed to give to purchasers and mortgagees acquiring interests in lands in reliance upon recorded titles, protection against claims and interests of which no notice was conveyed by the records. Its provisions are to be read in connection with those of the Civil Code. By article 27 'those who have not participated in the recorded instrument or contract' are considered as third persons. By article 33 'the record of instruments or contracts which are null in accordance with the law are not validated thereby.' But, notwithstanding this, by article 34 'instruments or contracts executed or covenanted by a person who, according to the registry, has a right thereto, shall not be invalidated with regard to third persons after they have once been recorded, although later the right of a person executing them is annulled or determined by virtue of a prior deed not recorded, or for reasons which do not clearly appear from the registry. Only by virtue of a recorded instrument may another later instrument, also recorded, be invalidated to the prejudice of third persons [with exceptions not now material]. The provisions of this article [34] may at no time be applied to the instrument recorded in accordance with the provisions of article 390, unless the prescription has validated or secured the interest referred to therein.' By article 36 'suits for rescission or determination of title shall not be instituted against third persons who have recorded the instruments of their respective interests in conformity with the provisions of this law.' But by article 37 exceptions are made to the rule thus declared, and one of them is, 'suits for rescission or determination of title which are due to the causes plainly expressed in the registry.'

Subsequent sections provide for the mortgaging of different interests in real property, and for various purposes, and declare the effect that shall be given to the mortgages, provide for the manner of keeping the registries, for making and correcting entries therein, and for proceedings for clearing the title of unrecorded mortgages and other charges and interests. Art. 389 prohibits the admission in the courts, etc., of unrecorded documents or instruments if presented for the purpose of enforcing, to the prejudice of third persons, interests which should have been recorded. Articles 390 to 395 inclusive contain provisions under which owners who lack a recorded title of ownership are permitted to record their interests by previously proving their possession before the judge of first instance, or the proper municipal judge, with the consent of the Department of Public Prosecution and citation of the adjacent property owners, should they desire to record the absolute ownership of some estate, and with the citation of the owner or other participants in the ownership, should they desire to record some property right. Article 391 prescribes the form of the proceedings. Article 392 provides that the court, on approving the proceedings, shall 'order that the record requested be made in the registry without prejudice to a third person having a better claim.' Among the prerequisites for converting entries of possession into records of ownership under this procedure it was, by ¶ 6 of art. 393, provided that twenty years must have elapsed since the date of entry of possession. By article 394, 'If the twenty years calculated from the date of the entry [of possession] have not elapsed, or the requisites mentioned in article 393 of this law have not been complied with, the entries of possession shall have the legal effect embraced in the provisions contained in the following paragraphs [viz.] The period of possession which appears to have elapsed at the time said entries are made shall be computed for the prescription which does not require a just title, unless a person prejudiced thereby denies it, in which case said period of possession must be proven in accordance with the common law. Entries of possession shall prejudice or favor third persons from the date of their record, but only with regard to the effects which the laws attribute to mere possession. The entry of possession shall not prejudice the person who has a better right to the ownership of the realty, although his title has not been recorded, unless the prescription has confirmed and secured the claim recorded. Between the parties the possession shall be effectual from the date prescribed by the common law. The provisions contained in the preceding articles, regarding the entries of possession, cannot be applied to mortgage rights, which cannot be recorded unless an instrument in writing is presented.'

Under the mortgage law, it seems to be settled that these proceedings for proving possession or ownership before the courts of first instance or municipal courts, although judicial in form, are intended merely as aids to the establishment of a system of authenticated instruments of title for purposes of the public records; that although under some circumstances it is required that notice be given to the owner or other persons interested adversely to the applicant, the proceedings are really ex parte, have not the effect of res judicata, and do not bind anyone who does not appear. Gonzalez v. People, 10 P. R. R. 458; Calderon v. Garcia, 14 P. R. R. 407, 416. And even with respect to a party who appears and opposes the entry of a possessory title or its conversion into a dominio title, his rights cannot be adjudged or passed upon in these proceedings, but must be decided in an ordinary action of revindication; the court being limited, in the proceedings under the mortgage law for a conversion of a possessory to a dominio title, to saying whether petitioner has shown a right to the conversion asked for; but without passing upon the rights of others. Paris v. People, 5 P. R. R. 29; Diaz v. Waymouth, 13 P. R. R. 317.

This is conceded by the appellants, who, indeed, base their argument upon it; contending, further, that, because of what has just been said, the rights of appellees in the land in question were not affected by the proceedings whereby Morales converted his possessory title into a title of ownership, and that the recording of this dominio title by him did not cut off any of their rights; that if such title was fraudulent it was liable to attack, even after registry, within any period short of thirty years after he has entered into possession of the land and while still recorded in his name, or in that of any other person excepting an innocent purchaser without notice; or, in the language of the civil law, 'a third party with good faith.' Paris v. People, 5 P. R. R. 29, 37; Gonzalez v. People, 10 P. R. R. 458, 462; Abella v. Antunano, 14 P. R. R. 485, 494; Merchant v. Lafuente, 5 Philippine, 638, 644.

Upon the strength of this, it is ingeniously argued that under the law of Porto Rico it was not the conversion of the apparent title of Morales from a possessory to a dominio title that cut off the rights of the appellees; but it was the fact that the appellants, in reliance upon that apparent title, and (as is said) without notice of the rights of the appellees, purchased the land from Morales, which by virtue of the mortgage law gave to them a better right than the appellees. And from this it is contended that the judicial order, in reducing from twenty years to six years the time that must elapse between the entry of a possessory title and its conversion into a dominio title, did not cut off any right of appellees, and therefore was not and is not inconsistent with 'due process of law.'

But it seems to us that there can be no difference in principle-so far as concerns the question whether the property of the appellees was taken from them without due process-whether there were two steps or three steps in the course of procedure by which the end was accomplished. Whether the retroactive effect of the judicial order resulted in conferring upon Morales a title that he himself could maintain against the true owners, or whether it conferred upon him an apparent title that not he himself but his grantees could maintain, makes no difference in a controversy between his grantees and the true owners.

In short, the position of appellees in that by the fraudulent conduct of Morales, plus the mortgage law, plus the judicial order, plus the dominio title in Morales founded thereon, and the recording thereof, plus the mortgage and deed to appellants, their property has been taken from them and given to appellants, without notice to them or an opportunity for a hearing; and that the proceedings in court for converting the possessory into a dominion title, while bearing the semblance of judicial proceedings, departed therefrom in the essentials. To this, it is no answer to say that those proceedings in court did not, under the mortgage law, purport to be judicial proceedings at all; nor to say that they would have done no harm except for the subsequent conveyance by Morales to the appellants.

We proceed, therefore, to consider the fundamental question upon which the court below rested its decree.

The judicial order of General Henry, dated April 4th, and published April 7th, 1899 (Mil. Ord. Porto Rico, vol. 2, p. 71), contains seven clauses or paragraphs, of which the first amends article 1957 of the Civil Code so as to reduce the period for prescription by possession accompanied with good faith and a proper title, from ten years with respect to persons present, and twenty years with respect to persons absent, down to six years as to persons both present and absent. This has no direct bearing upon the present case, for reasons already indicated.

Other clauses of the order amend articles 391, 393, 394, and 395 of the mortgage law. The most important is that which amends paragraph 6 of article 393, so as to reduce from twenty years to six years the period during which possession must continue in order to convert an entry of possession into a record of ownership upon the public records. The final clause declares: 'This order shall have retroactive effect.'

The court below held (5 Porto Rico Fed. Rep. 463) that, assuming General Henry possessed all the legislative power that is possessed by Congress under the Constitution, he was still necessarily subject (as Congress would be) to the'due process of law' clause of the 5th Amendment. And since his judicial order, because of its retroactive clause, by its terms covered the present case, where the real owners of the land were infants and unable to protect themselves, and where they still had, under the mortgage law as it stood, nearly twelve years in which to attain maturity and contest the possession and right of Morales; and since the order shortened the period of limitation to six years, which period in their case had already elapsed, the order at the same time containing no provision for saving existing rights or giving to them or to others in like situation any opportunity to assert their rights,-it was the same in effect as taking their property without due process of law.

We find it unnecessary to consider whether the authority of General Henry was subject to the same constitutional limitations as that of Congress; for we have reached a like result, so far as the present case is concerned, upon different reasoning.

Porto Rico at the time was still foreign territory, and was under a provisional military government established by President McKinley as Commander-in-Chief. In order to determine the extent of the authority of General Henry, and the limitations upon it, we must look to the orders under which the military government was established and maintained.

The Island was occupied by the forces of the United States under Major General Miles, Commanding United States Army, on July 25, 1898. He appears to have had no special instructions from the President respecting the government that should be established, but it was well understood that he and those under him were subject to the instructions communicated by President McKinley to the Secretary of War under date July 13th with reference to Cuba (10 Mess. & Pap. 214), and published by the War Department as General Orders No. 101, under date July 18, of which a copy is set forth in the margin.